Here's why the £250m Scottish film studio bid has been thrown into turmoil

Hamish Lean of Shepherd + Wedderburn says the decision by the Scottish Land Court to back farmer Jim Telfer not be be removed from his smallholdings so the Pentland Studios project can go ahead is a cautionary tale for landlords and developers

A Scottish court ruled this week that small landholding farmer Jim Telfer could not be removed from land earmarked for a proposed £250 million film studio development - known as the Pentland Studios project.

The Scottish Land Court’s rejected the application by the trustees of Miss J M H Gibsone of Pentland’s Trust to take back two smallholdings at Pentland Mains from Mr Telfer and create the studio.

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The reason centred on the trustees' failure to satisfy the court that the resumption was for a reasonable purpose having relation to the good of the estate.

Hamish Lean is a partner and leading agricultural law specialist at Shepherd + Wedderburn

The court accepted Mr Telfer’s arguments that the true purpose of taking back the smallholdings was to enable the Pentland estate to be sold with vacant possession and that only the trustees would benefit financially, along with the prospective purchasers.

Here's what Scottish Land Court highlighted

The court said that while it was legitimate for the landlord to benefit from resumption, it could not solely benefit the landlord or a third party, particularly, as in this instance, when the ultimate intention was for the estate to be divided up and sold.

It added that if the legislation applying to smallholdings had included provisions for taking into account the public interest in, and benefit from, the proposed resumption, then the intended construction of a film studio may have constituted a reasonable purpose.

Had James Telfer’s tenancy fallen under the Crofting Acts instead of the legislation governing smallholdings, then it is likely the application for resumption would have been granted because crofting legislation provides for resumption having relation to the public interest.

Whether or not the application was invalid due to the existence of a written lease in respect of Number 1 Holding was discussed and dismissed.

The court agreed with Mr Telfer that the terms of the written lease were inconsistent with the legislation governing smallholdings in some respects.

And it ultimately decided that William Telfer, and James who had succeeded him as the tenant of Number 1 Holding in 1989, held the property on a smallholding tenancy.

To appeal or not to appeal

Given the importance of this matter to the parties and what is at stake, it seems reasonable to presume the applicants will appeal this decision to the Inner House of the Court of Session.